Housing Investment Taskforce - June 2025 - Quick Wins

Scotland needs every type and tenure of housing but neither the public nor the private sector can deliver what is needed alone.

Bringing together a mixture of mainstream housebuilders, investment funds, lenders and public bodies, the Housing Investment Taskforce was convened by the then Scottish Housing Minister, Paul McLennan, to identify the barriers to investment in housing in Scotland and identify the keys to unlocking that investment.

The Taskforce remit was to:

• build investor confidence and attract further mobile capital investment into housing;
• unlock existing financial commitments;
• encourage and promote new delivery partnerships; and
• identify ways to shift the balance of investment in affordable housing to increase private funding, including from relevant comparator markets and jurisdictions.

The headlines from the Taskforce Report published on 9 June 2025 include recognising housing as critical infrastructure, supplementing public investment with private capital, fixing the planning system, taking a more entrepreneurial approach and potentially fundamentally reshaping the funding and delivery of affordable housing. Click [here]  for more on the Report's findings on affordable housing.

The Report immediately recognises that 'there is no silver bullet, but anticipates that structural changes initiated now to deliver, over the long-term, fundamental improvements to supply are within our gift.'

So, what does the Taskforce believe needs to happen to deliver the much-needed housing at scale? Answer – a lot.

The Report concludes with 28 action points (listed below), many of which require further exploration, investigation and consideration. With the varied constituencies represented on the Taskforce, it was perhaps difficult for final landings to be agreed on what actions are needed, but someone must grasp the nettle and push forward to make some progress in tackling the housing emergency which exists in Scotland.

There are, however, some quick wins to be had in the action points.

1. Exempt Build to Rent and Mid-Market Rent properties from rent control, then implement positive and assertive communication on Scotland being open for business for new housing investment into these investment-ready sectors.

The current consultation on exemptions from rent controls asks whether BTR and MMR properties should be exempted. If these exemptions come into force, communicating that message may soften the blow dealt by the imposition of a Building Safety Levy in Scotland.

6. If implemented, ensure the transition to Building Safety Levy is managed to minimise impact on pipeline and viability.

The Building Safety Levy is coming to Scotland and will be imposed at the completion certificate stage on all new residential developments except for social and affordable housing. The aim is to have the Levy in place by April 2027 following on the tail of the English Safety Levy which is due to come into force in the Autumn of 2026.

There are provisions for more exemptions from the Safety Levy. Bearing in mind the restricted availability of construction teams across the country, attention has turned to exempting SME housebuilders. However, as drafted, the Levy will apply to BTR and PBSA developments, both models which work differently from build to sell models in terms of basic cashflows at the completion certificate stage.

13. Reform law, including on long leases, to open up new opportunities for partnerships and a commercial shared-ownership model for home buyers.

The Housing Bill will make its way through Stage 3 after the summer recess. This could present an opportunity to remove the 20-year restriction on leases over residential property. Generally speaking, as things stand, leases to RSLs and private residential tenancies granted to tenants are not subject to the 20 year restriction. On the other hand, investors and others face an anachronistic prohibition on leases of more than 20 years over residential property which was originally aimed at preventing feudal law operating in residential tenancies. Removing that prohibition will pave the way for more funding structures for residential properties.

Those are all perhaps achievable short-term goals.

In the longer term, recognising that major changes cannot happen overnight, the Scottish Government, with UK Government support where needed, could take some bold steps and begin to facilitate the following in response to more of the action points

3. Ensure the planning system is an enabler for increased supply, fast tracking decisions, resourcing pre-application discussions and appropriately considering viability of developments; and

11. Take a more entrepreneurial approach to development, prioritising areas where strategic economic opportunities align with areas of private sector housing pressure and leverage public sector assets (land, equity or subsidy) through a default ‘commercial first’ and risk/reward share.

The Scottish Government needs to take a coordinated approach to action points 3 and 11 when it comes to the planning system. Bring back the presumption in favour of sustainable development, test the viability of proposed developments more rigorously, build in periodic reviews of outstanding permissions where works have either not started or stalled and truly empower the new Planning Hub to fast track decisions.

5. Review the role of taxation in supporting housing investment.

The Report does not go into detail on this action point. With all types of housing in all types of location needed, bringing more homes to our city centres could be incentivised by for example, introducing a relief akin to the old business premises renovation allowance tightly drawn to prevent abuse and exempting city centre buildings from the new Building Safety Levy where they are being redeveloped and converted to residential use.

The Taskforce rightly points to the need for long-term strategy on housing but does not address how to deal with the inevitable disruption caused by governments changing every five years. With that in mind, is there a need for a single body to oversee housing in Scotland, one that survives the changes in Government every five years and can act independently of the policy whims of politicians? A body perhaps similar to Homes England which can transcend politics and planning constraints with access to both public and private funding.

The former Housing Minister Paul McLennan confirmed that “We’re taking forward these recommendations in the Programme for Government and will work in partnership with taskforce members and other organisations to grow investor confidence to support the delivery of more homes across Scotland.” The new Housing Minister, Mairi Macallan, has an uphill task in implementing those recommendations but perhaps she is the one who will grasp the nettle and make real progress in tackling the housing shortage.  

Actions summary

The actions identified by the Taskforce in this Report to support investment in new and existing business models to deliver at scale are:

1. Exempt Build to Rent and Mid-Market Rent properties from rent control, then implement positive and assertive communication on Scotland being open for business for new housing investment into these investment-ready sectors.
2. Make Scotland one of the most attractive destinations for investment into all forms of housing, through clear, consistent and long-term policy.
3. Ensure the planning system is an enabler for increased supply, fast tracking decisions, resourcing pre-application discussions and appropriately considering viability of developments.
4. Economic development agencies to intervene to grow the contractor base.
5. Review the role of taxation in supporting housing investment.
6. If implemented, ensure the transition to Building Safety Levy is managed to minimise impact on pipeline and viability.
7. Provide certainty for education provision costs for the affordable housing sector.
8. Consider whether efficiencies can be made in delivery of the new school buildings programme.
9. Test market demand for loan options to support infrastructure costs where the scale or availability of finance is preventing build-out, including what risk/reward sharing models would be workable.
10. Use public sector land to create income streams rather than an up-front capital receipt.
11. Take a more entrepreneurial approach to development, prioritising areas where strategic economic opportunities align with areas of private sector housing pressure and leverage public sector assets (land, equity or subsidy) through a default ‘commercial first’ and risk/reward share.
12. Scottish National Investment Bank could take a key role in bringing together private/public sector partnerships and attracting private capital.
13. Reform law, including on long leases, to open up new opportunities for partnerships and a commercial shared-ownership model for home buyers.
14. Explore pension fund aggregator to support local authority borrowing.
15. Consider if guarantees to improve pricing from an institutional investor offers best use of resources.
16. Stimulate further discussions between RSL demand and investor appetite and discuss with affordable housing providers what further support would be appropriate and useful.
17. Make a long-term commitment to a minimum level of funding for new affordable housing supply recognising housing as critical infrastructure.
18. Co-produce a robust and evidence-based business case for public, affordable housing investment which will also support demonstrating social value in land disposal and targeting of investment at areas of acute need.
19. Reconsider whether allocation of affordable housing supply funds is maximising investment and value for money, take a more expansive approach to delivery with improved clarity on what safeguards are in place for tenants, and enter into strategic commitments with providers that can leverage private finance more effectively.
20. Publish data-driven performance and outcomes from affordable housing investment.
21. Assess capacity of the RSL sector to deliver new supply.
22. Allow RSLs to provide mid-market rental properties as part of core operations.
23. Seek a change in approach so that housing investment by local authorities does not count towards state borrowing, in line with international best practice.
24. Seek write-off of historic Housing Revenue Account (HRA) debt to provide immediate capacity for new supply.
25. Make legislative change to support greater flexibility for local authorities to transfer funds from the General Fund to HRA with statutory guidance to enable this in the interim.
26. Allow new entrants to deliver affordable housing on a ‘for-profit’ basis utilising public sector pension funds.
27. Investigate further the investment in assets for use as temporary accommodation.
28. Start work on multi-generational legacy of creating a revolving fund, and as seen in Denmark.